My net worth increased by nearly $1 million in 2017! Here’s how that happened…
I went through Mint.com to see how much I made in 2017. I had to clean up the data because it counted a lot of transfers from one account to another as income, but aside from that, the fact that all my information is consolidated on one platform is excellent.
In 2017, I made $168,126.97 after taxes.
It was a good year. I know this is a lot of money. It certainly is relative to what my family lived off when I was a young child. My father, somehow, supported a family of five with around $18k per year. I use this knowledge to motivate me to not be wasteful with my income now.
To see my rate of return, I used Personal Capital.
Mint is my day-to-day money management tool, and I exclusively use Personal Capital for checking my investment portfolios. Personal Capital a vastly superior tool for that purpose. I’ll write up in-depth reviews on both these services when I become an affiliate of these peeps (wink wink).
Here are my 2017 investment returns:
I’m happy to say that I managed to outperform the S&P 500 in 2017! This was with a roughly 30% overall cash drag. Why did I have this cash drag? I had a feeling I had to GTFO of my job.
Except for a brief period earlier in the year, I managed to stay above the S&P consistently. I had substantial positions in overseas companies and those outperformed relative to the rest of the portfolio.
I also have “alternative” investments like cryptos that weren’t rolled up into my performance here.
Bitcoin, Litecoin, Ether, and Bitcoin Cash were in my portfolio at various points in the year but cashed out when Bitcoin crossed $5,000.
I began investing in cryptos circa 2014, so the return was phenomenal, but I had small bets placed because of the perceived risk.
I’m mostly out of cryptos now because I’m uncertain about which currency will prevail long-term. I am a big proponent of distributed ledger technology, but I’m happy to sit this wild ride out until I get a better sense of what’s happening.
Given that I’m also currently fun-employed, I’m not comfortable going that far out on the risk curve with cryptos at the moment.
Change in Net Worth
Ok, now to the part you’ve waited for.
I started 2017 with a negative net worth.
While I had some money in my 401(k), car loans, student loans, and some credit card debt dipped my net worth into the negative territory.
How do you get student loans when you have a full-ride? Cost of living. I lived in an obscenely expensive city while studying for my MBA and the money I took out was used mostly to pay rent. While I had saved up a considerable sum in the Army, moving my then-fiancee and me thousands of miles and then having to put down $10k to move into an apartment was a huge drain. That $10k, by the way, was CHEAP relative to most other options.
December 2016 Net Worth: -$150,639
December 2017 Net Worth: $797,860
Delta 2017 Net Worth: + $948,500
WTF is that, how?
The increase in my net worth can be broken down into several components: Savings and Investments, Debt, and Other.
Savings and Investments
According to Mint, my savings and investments added $96,672 to my net worth in 2017. The Swan FIRE Progress Gauge is a favorite metric that swept through the FIRE community in 2017. You can find out more about it here.
Based on my net income, my FIRE Progress Gauge is .6x. With “other,” it’s 5.6x. Another popular metric is the savings rate, but I prefer the Progress Gauge personally.
My goal this year was to exceed a .5x progress gauge, so I’m ecstatic that I did this. Given that I left my job in late October and have had zero salary since then, I’m especially proud of my progress. However, it’s not good enough. When I start working again, I will get my rate to 75% by saving more aggressively.
Paying down debt is another powerful way to increase your net worth.
Not only do you no longer have something pulling down your net worth on paper with a big ugly (-) in front of it, you can save and invest the money that you previously used to pay your debt.
December 2016 Debt: $202,337
December 2017 Debt: $172, 882
Delta 2017 Debt: -$29,455
I paid down almost $30k of debt in 2017 by:
- paying off a car note
- paying down my credit cards aggressively
- making more than the minimum payments on my student loans
I was tempted to pay down significantly more of my student loan debts this year, but I had a sixth sense that I’d be leaving my job soon. So instead, I hoarded a LOT of cash. In hindsight, this was the right thing to do.
The finance industry is volatile, and you have to quickly develop a sense of how well your company or business unit is doing. It doesn’t matter how well you perform if your business as a whole is not performing. If you don’t develop this sixth sense, you get pantsed and ultimately won’t last long in this industry.
Now, we discuss the “other.”
In late 2017, after several years of going back and forth with the Department of Veterans Affairs, I was awarded a disability rating.
The disability rating is substantial, and is tied to service-connected disabilities I incurred in the Army.
I’m grateful that I finally received a disability rating. It is a long, disappointing, frustrating, and demoralizing road.
I gave up trying to work with the VA for several years and instead vowed to get to the point where I didn’t need their money anyway. Mission accomplished, and this is now icing on the cake.
While I’m grateful for receiving disability payments now, I don’t consider them fortunate or lucky. I earned them by putting myself at risk.
These payments are the result of permanently losing the ability to run (at all) or walk/stand for more than a few minutes at a time. I also came down a wee touch of PTSD, which isn’t ideal.
I’d rather have no disabilities and no disability payments. That’s life, though. You embrace the suck and drive on. I have several friends paid the ultimate price overseas or are missing limbs. One committed suicide. When you frame things this way, I’m a lucky guy.
I’m telling you this because I promised to be as transparent or “open kimono” about my life as possible on this blog. No smoke, no mirrors.
Speaking of kimonos, I valued these disability payments using a method outlined by Sam Dogen, the Financial Samurai.
I highly recommend using his method if you have any pension or disability payments coming your way.
2017 was a phenomenal year for me financially. While a significant portion of that came from an unexpected windfall (VA Disability), I’m still proud of my ability to increase my net worth by almost $100k in one year without that surprise.
I’ve outlined some of the methods I used to get here in earlier posts. I’ll expound on some of the ideas I haven’t covered yet in the coming weeks, so sign up to my mailing list below to make sure you get these updates!
Thanks for reading, and may you have a phenomenal 2018 filled with abundant goal-crushing!
How was your 2017? What did you do well and what can you do better? What are your new financial goals this year?